Correlation Between Sam Yang and Cuckoo Electronics

Can any of the company-specific risk be diversified away by investing in both Sam Yang and Cuckoo Electronics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sam Yang and Cuckoo Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sam Yang Foods and Cuckoo Electronics Co, you can compare the effects of market volatilities on Sam Yang and Cuckoo Electronics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sam Yang with a short position of Cuckoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Yang and Cuckoo Electronics.

Diversification Opportunities for Sam Yang and Cuckoo Electronics

-0.27

Correlation Coefficient

Sam Yang  Cuckoo Electronics

Very good diversification

The 3 months correlation between Sam and Cuckoo is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and Cuckoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Electronics and Sam Yang is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sam Yang Foods are associated (or correlated) with Cuckoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Electronics has no effect on the direction of Sam Yang i.e., Sam Yang and Cuckoo Electronics go up and down completely randomly.

Pair Corralation between Sam Yang and Cuckoo Electronics

Assuming the 90 days trading horizon Sam Yang Foods is expected to generate 2.45 times more return on investment than Cuckoo Electronics. However, Sam Yang is 2.45 times more volatile than Cuckoo Electronics Co. It trades about 0.31 of its potential returns per unit of risk. Cuckoo Electronics Co is currently generating about 0.12 per unit of risk. If you would invest  54,200,000  in Sam Yang Foods on September 14, 2024 and sell it today you would earn a total of  13,900,000  from holding Sam Yang Foods or generate 25.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sam Yang Foods  vs.  Cuckoo Electronics Co

Sam Yang Foods

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Cuckoo Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cuckoo Electronics Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cuckoo Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sam Yang and Cuckoo Electronics

The main advantage of trading using opposite Sam Yang and Cuckoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Yang position performs unexpectedly, Cuckoo Electronics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cuckoo Electronics will offset losses from the drop in Cuckoo Electronics' long position.

The idea behind Sam Yang Foods and Cuckoo Electronics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.